Walking wounded: The British economy in the aftermath of World War I

Nicholas Crafts 27 August 2014

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World War I was not over by Christmas of 1914. It was a prolonged, brutal, and expensive conflict.  Britain incurred 715,000 military deaths (with more than twice that number wounded), the destruction of 3.6% of its human capital, 10% of its domestic and 24% of its overseas assets, and spent well over 25% of its GDP on the war effort between 1915 and 1918 (Broadberry and Harrison, 2005).  Yet that was far from the sum of the losses that the Great War inflicted on the British economy; economic damage continued to accrue throughout the 1920s and beyond. 

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Topics:  Economic history

Tags:  World War I, unemployment

Using product- and labour-market tightness to understand unemployment

Pascal Michaillat, Emmanuel Saez 12 August 2014

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For the five years from December 2008 to November 2013, the US unemployment rate remained above 7%, peaking at 10% in October 2009. This period of high unemployment is not well understood. Macroeconomists have proposed a number of explanations for the extent and persistence of unemployment during the period, including:

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Topics:  Global crisis Labour markets

Tags:  unemployment, demand shocks, sticky prices

How immigration benefits natives despite labour market imperfections and income redistribution

Michele Battisti, Gabriel Felbermayr, Giovanni Peri, Panu Poutvaara 08 August 2014

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A fierce policy debate with little insight from economists

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Topics:  Labour markets Migration

Tags:  Labour Markets, unemployment, wages, immigration, redistribution, welfare, Skill Complementarities

The Chinese labour market: High unemployment coexisting with a labour shortage

Yang Liu 19 July 2014

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In China, both a labour shortage and unemployment have emerged as problems in recent years. The number of university students scheduled to graduate in June 2014 is 7.27 million, increasing with 280,000 from 2013 (MHRSS 2014). Following 2013 – at the time considered the most difficult year for job seekers in history – 2014 is expected to be even harsher. Problems in the labour market in China, which is a key region for Japanese companies advancing overseas, are also attracting attention in Japan.

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Topics:  Labour markets

Tags:  China, unemployment, labour shortage

Globalisation, job security, and wages

Kerem Cosar, Nezih Guner, James R Tybout 07 July 2014

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How does increased openness to international trade affect workers’ wages and job security? This question is central to the public debate concerning the effects of globalisation, but convincing quantitative answers have been difficult to come by. One fundamental reason is that major trade liberalisation episodes have often coincided with labour reforms (Heckman and Pages 2004). Colombia is a case in point. As Figure 1 shows, this country experienced deindustrialisation, higher job turnover rates, and heightened wage inequality in the years following its 1986–1991 trade liberalisation.

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Topics:  International trade Labour markets

Tags:  productivity, unemployment, globalisation, wages, trade liberalisation, Inequality, labour market reforms, exports, Colombia, job security

The Great Recession’s long-term damage

Laurence Ball 01 July 2014

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According to macroeconomics textbooks, a fall in aggregate demand causes a recession in which output drops below potential output – the normal level of production given the economy’s resources and technology. This effect is temporary, however. A recession is followed by a recovery period in which output returns to potential, and potential itself is not affected significantly by the recession.

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Topics:  Global crisis

Tags:  growth, unemployment, OECD, potential output, Great Recession, hysteresis

The great British jobs and productivity mystery

João Paulo Pessoa, John Van Reenen 28 June 2014

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With some economic recovery having finally got underway, the UK is still feeling the repercussions of the so-called ‘Great Recession’. National output, as measured by GDP, fell by over 7% from its peak in January 2008 – the biggest fall since the inter-war years – and only returned to its pre-crisis level in April 2014 (NIESR 2014). This has been the slowest recovery in this century (see Figure 1).

Figure 1. The profile of recession and recovery

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Topics:  Europe's nations and regions

Tags:  unemployment, productivity growth, UK, Great Recession

Falling real wages in the UK

David Blanchflower, Stephen Machin 12 May 2014

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There have been unprecedented falls in real wages in the UK since the start of the recession triggered by the financial crisis of 2008. This did not happen in previous economic downturns – median real wage growth slowed down or stalled, but it did not fall. Indeed, in past recessions, almost all workers in both the lowest and highest deciles of the wage distribution experienced growing real wages. It was the unemployed who experienced almost all the pain – they lost their jobs and much of their incomes, and many were unemployed for a long time.

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Topics:  Labour markets Poverty and income inequality

Tags:  US, unemployment, wages, Inequality, UK, Great Recession, real wages

From sick man of Europe to economic superstar: Germany’s resurgence and the lessons for Europe

Christian Dustmann, Bernd Fitzenberger, Uta Schönberg, Alexandra Spitz-Oener 03 February 2014

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In the late 1990s and into the early 2000s, Germany was called ‘the sick man of Europe’ (Bertram 1997). Today, Germany is Europe’s economic superstar.

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Topics:  Labour markets

Tags:  unemployment, Hartz reforms

Labour markets reforms and unemployment: Estimating the effects of wage moderation in the Spanish economy

Miguel Cardoso, Rafael Doménech, Juan Ramón García, Camilo A. Ulloa 20 December 2013

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With its huge unemployment rate, if there is a country in need of assessment of labour markets reforms and wage moderation, it is Spain. In the third quarter of 2013 the unemployment rate reached 26% of the labour force, more than twice the Eurozone’s 12.1%. As shown in Figure 1, since the beginning of the crisis in the first quarter of 2008, Spain has lost 17.5% of its employment (22.8% in the private sector), while the average real wage increased 7.6% until the second quarter of 2012.

Figure 1 Employment and real wages in Spain, 2007-2013

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Topics:  Europe's nations and regions Global crisis Labour markets

Tags:  unemployment, reforms, labour-market flexibility

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